Disney Stock (NYSE:DIS): The Ultimate Back Door Into the Metaverse

Fred Prouser / Reuters - stock.adobe.com

Disney (NYSE:DIS) stock has been gaining a bit of ground lately following its stellar quarterly earnings report. It wasn't just the better-than-expected numbers but recent moves, including taking a $1.5 billion stake in Fortnite-maker Epic Games, that have me viewing Disney as a potential back door into the realm of the Metaverse.

As Disney's top boss and CEO, Bob Iger, looks to bring the firm back to the top again, it's hard not to be a raging bull on the stock. Combined with more activism from activist investor Nelson Peltz (he's still pursuing board seats), looking to pressure for positive change, I couldn't be more bullish on the stock as it looks to pivot.

With the stake in Epic Games, the recent sports streaming partnership with rival streamers, and news of Taylor Swift's Eras tour coming to the Disney+ streaming platform, there hasn't been this much to be excited about with regards to Disney in quite a while.

From Eras to Sports Streaming, Disney May Have Its Eyes on the Metaverse

In many ways, Taylor Swift's Eras could be the biggest non-Disney production to land on the platform since the firm brought Broadway hit sensation Hamilton just a few years ago. Though Eras could give consumers another reason to resume their Disney+ subscriptions, I view the biggest takeaway from the latest quarter (and commentary) as Disney's ambition when it comes to the virtual realm.

Further, the streaming of concert tours represents a stark contrast to the content offered by other video streamers. Though concerts, plays, and recorded live experiences are fun to view through your television, I believe that they are best enjoyed in the realm of virtual reality.

Disney's openness to exploring the realm of virtual reality and spatial computing is nothing new. Remember when Bob Iger was on stage during the reveal of the Apple (NASDAQ:AAPL) Vision Pro? Iger saw the potential in Apple's latest product, and his firm's recent bets look like they'd translate into the realm of immersive worlds very nicely.

Disney+ has been hot on Vision Pro's tracks since day one, even as some of its peers, most notably Netflix (NASDAQ:NFLX) opted not to develop a native visionOS app in these early stages for Apple's newest product. Personally, I think Netflix has a lot to lose if it doesn't end up creating a slew of content for the new spatial medium, as Disney has. Of course, Netflix has deep enough pockets to play catch up at a later date, perhaps when headsets become more commonplace in the household.

For now, though, Disney has its sights set on the future. And for that reason, I prefer Disney over the likes of Netflix. In many ways, Disney seems to be on the right track, bringing must-see "experiences" like Eras to its platform. Imagine experiencing the content on a 100-foot screen on your Vision Pro headset. Such an experience will make like you're almost a part of the action.

Disney's Comeback Could Be Fueled by Spatial Computing, Vision Pro

In the future, I'd look for Disney to invest more in spatial cameras for various productions — like those on the iPhone 15 Pro line — that can deliver "spatial" experiences that take the immersive factor to the next level. In its current state, the Vision Pro seems like a risky innovation to shrug off through the eyes of a prospective content creator. However, in a few years, it could become a must-have device as more content from Disney and others lands gradually.

Over time, it's certainly not hard to envision a flood of high-quality "spatial" content storming over to the Vision Pro, perhaps thanks in part to forward-thinking content creators like Disney. Apart from concerts, video games, and other experiences, Disney's sports streaming push may be just the first step to achieving the holy grail of virtual court-side seats via spatial computers and VR headsets.

Indeed, ESPN has been a drag on Disney's business for quite some time. But in the realm of spatial computing and streaming, the ESPN acquisition may finally prove its worth. Even if spatial computing takes a couple more years to take off (the form factor remains a tad too bulky), I have to say I'm impressed with where Disney is headed. It looks to be strolling right into the Metaverse. And if virtual-reality headsets end up a success, I'd argue that Disney could have what it takes to fight back at Netflix at long last.

Is DIS Stock a Buy, According to Analysts?

On TipRanks, DIS stock comes in as a Moderate Buy. Out of 21 analyst ratings, there are 16 Buys, four Holds, and one Sell recommendation. The average DIS stock price target is $115.50, implying upside potential of 2.7%. Analyst price targets range from a low of $82.00 per share to a high of $130.00 per share.

The Bottom Line on DIS Stock

In many ways, Disney seems to be the ultimate metaverse content play, as it looks to become one of the bigger developers for so-called "killer" apps on the next generation of spatial computing products.

From sports streaming to metaverse-like video games (think Epic's Fortnite) and recorded concert experiences, Disney seems to be rolling the dice on the Metaverse. And it certainly could win in a big way as the field evolves. Indeed, Disney and Apple seem to be forming a symbiotic relationship as both look to unlock the full power of the immersive virtual worlds of tomorrow.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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